One, Two, Three Examples of ObamaCare's Harmful Effects

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September 9, 2014 - 15:03 — Elizabeth Wright

Three interesting articles can be found in the September 8 Weekly Special Edition of Investor’s Business Daily (IBD) concerning the Affordable Care Act (ObamaCare) with respect to jobs and the economy.

Low-Wages + ObamaCare = Fewer Work Hours

One article, entitled “Low-Wage Workers See Hours Trimmed as ObamaCare Hits,” concerns how little discussion there is on this topic about low-wage earners. Most of the noise with respect to these low-wage earners is about raising the minimum wage.

IBD undertook an analysis and found that, “Since December 2012, private industries paying up to about $14.50 an hour have added, on net, 972,000 nonsupervisory jobs with an average workweek of a mere 17.7 hours. That doesn't mean new employees are being hired for such few hours. Rather, it reflects a combination of reduced hours in existing jobs and short workweeks for newly created jobs.”

IBD found that low-wage workers have seen their work day week shrink to just 27.3 hours per week this July. That is the shortest workweek on record, except for last February when blizzards shut down a lot of the country. According to IBD while some economists have argued that there has been no shift to part-time work due to ObamaCare, in reality the shorter hours by non-managers in low-wage industries are being masked because the rest of the workforce has been working longer hours. IBD writes the evidence points to ObamaCare as being an important factor in the shrinking work week. The reason why hours are being dropped to an average of 27.3 is because if an employee works over 30 hours, the employer must provide health insurance. You can read the article here.

450 and Counting

Keeping with the part-time worker theme as mentioned above, the second story is about how IBD keeps a tally on businesses and local governments cutting their employees’ hours because of ObamaCare. Says IBD, “ObamaCare's impact on jobs is hotly debated by politicians and economists. Critics say the Affordable Care Act gives businesses an incentive to cut workers' hours below the 30-hour-per-week threshold at which the employer mandate to provide health insurance kicks in. White House economists dismiss such evidence as anecdotal, but BLS data show that the workweek in low-wage sectors sank to a record low in July — just before the Obama administration delayed enforcement of the employer mandate until 2015.”

The tally shows that 86 private businesses and 364 public entities have cut workers’ hours to less than 30 hours per week or have cut staffing to avoid the ObamaCare mandate. IBD invites readers to tell them of any businesses or governments that should be on the list and if they have supporting evidence. You can find the tally here.

The 46 Percenter

The third story concerns how the government has become a bigger piece in the healthcare-spending pie, now at 46 percent. Of course, the government cannot spend anything without tax dollars so it really means that taxpayers are footing the bill for almost half of all healthcare spending.

President Obama said that ObamaCare would bend the healthcare cost curve down but that had already been happening within private sector spending since the 1960s. But, the private sector downward trend has been replaced by increased government spending. It is expected that government spending on healthcare at all levels amounts to approximately $1.4 trillion this year. If the trend is not reversed, the taxpayers will be paying for more than half of all healthcare costs by 2028.

IBD states that, “ObamaCare is fueling some of this spending surge. This year, federal spending on health care is expected to climb an eye-opening 14.7%. And its growth rate will exceed that of private spending for at least the next 10 years, the data show.” In particular, Medicaid will shoot up by 18.4 percent this year. This is due to 28 states expanding Medicaid eligibility as allowed under ObamaCare but also because people who were already qualified for the program prior to healthcare “reform” are signing up in larger numbers.

This may sound like a good thing but Medicaid is a terrible healthcare program, both fiscally and in quality of care provided, as Citizens Against Government Waste documented in its January 2014 and February 2014 WasteWatcher.

IBD notes that Douglas Holtz-Eakin, former head of the Congressional Budget Office and now president of the American Action Forum, finds the government growth in healthcare disturbing. He tells IBD that, "You are basically saying, we want to put a lot of the health sector's future innovation in the hands of government programs [but] the government doesn't have a good track record when it comes to innovation.”

Another trend due to ObamaCare is less out-of-pocket (OOP) costs as a percentage of healthcare spending. According to IBD, it is likely OOP costs will drop $1 billion this year alone and that ObamaCare will accelerate this trend. IBD writes, “While that drop in out-of-pocket costs might seem like good news, some health care economists say it will fuel health care inflation. These economists point out that the less consumers are aware of the cost of health care, the more they'll likely demand, which has contributed to cost spikes in the past.”

One only needs to look to Canada, Great Britain or other countries with nationalized healthcare to see what happens when it becomes “free” to their citizenry. Healthcare spending rises exponentially and eventually price controls are implemented to control costs. Care is rationed by governing bodies, such as the National Institute for Health and Care Excellence, and by long waits to gain access to specialists and certain technologies, such as CT scans. These are common occurrences in socialized or “single-payer” medicine, as CAGW wrote in its June 2014 WasteWatcher.

In contrast, outside of ObamaCare, IBD points out that employers have been shifting to consumer-driven health plans by utilizing health saving accounts or HSAs. IBD writes that HSAs have, “been widely credited with contributing to the slowdown in health spending over the past five years.” HSAs are combined with a catastrophic insurance plan and are used to pay for routine care and OOP costs.

With respect to healthcare costs, one item that has been in the news lately is the price of new pharmaceuticals. IBD writes that the Centers for Medicare and Medicaid Services (CMS) reports that prescription drugs only account for 9.5 percent of health spending in 2014. This fact is interesting since the insurance industry consistently attacks the drug industry over high drug prices but according to IBD, the “‘net cost of private health insurance’ -- which is industry revenue after paying claims -- is on its way up. CMS expects these insurance costs to account for 6.6% of the nation's health spending by 2023, up from 6.4% this year and [it was] only about 2.4% in 1960.”